Proposed coalbed methane (CBM) development near Fernie in southeast B.C. will be tightly regulated to protect waterways in both the province and neighbouring Montana, says the head of B.C.’s Oil and Gas Commission (OGC).
The regulatory agency will require any contaminated water that’s produced from the coal seams along with the natural gas to be injected deep underground, rather than be disposed of into a local waterway, commissioner Derek Doyle said in an interview.
“What we’re saying to (companies) is, we require you to re-inject water unless you can clearly demonstrate that the water will meet all of our industrial discharge requirements,” he said.
Montana Gov. Judy Martz has written to Ottawa, asking the Canadian government to do a full-scale federal environmental impact study or participate in a joint international assessment of the proposed CBM development in B.C.’s Elk Valley, just north of Glacier National Park.
“Our concern is that once the (CBM) leases are sold, we could be looking at full-scale development long before anybody has a real idea of the impacts,” said Todd O’Hair, a spokesman for the governor.
Fernie town council, Kalispell Chamber of Commerce in Montana, both of the state’s senators and its lone congressional representative have all asked for the project to be put on hold until a comprehensive environmental assessment is done.
David Thomas, a Fernie town councillor, has said that CBM development in the Elk Valley will have a “far greater impact” on U.S. water quality, wildlife and the environment than oil and gas exploration in the Arctic National Wildlife Refuge in Alaska.
At stake are more than 20 trillion cubic feet (tcf) of natural gas – worth about $140 billion at current prices – that geologists believe are trapped in coal seams in three southeast B.C. coal fields: Elk Valley, Crowsnest and the Flathead.
The B.C. provincial government is offering royalty breaks and other incentives to kick-start a CBM industry in B.C., which, unlike Alberta, has no commercial production of the coal gas.
BC Energy and Mines has offered CBM leases for sale on two parcels of land totalling 20,000 hectares in the Elk Valley. The leases are scheduled to be sold on August 25.
Government officials in Montana are worried that the water found with most coalbed methane wells, and which must be pumped to the surface to get at the gas, could harm the wild Flathead River, which flows into Montana from B.C. The state hasn’t been able to get any data on water quality and quantity in the Elk Valley region from B.C. environment officials, O’Hair said. “The fact that they don’t have any water- quality data is a big concern to us.”
But commissioner Doyle says this data will be collected as the company or companies that buy the gas leases proceed through the province’s three-phased process used to regulate CBM development.
The first, exploratory phase will entail the drilling of only a few wells to determine the types of coal seams and how much natural gas they hold, he said.
The second, feasibility phase involves testing for how much gas and water the coal seams will actually produce. Calgary-based EnCana Corp. has a pilot CBM project in the Elk Valley that’s in the feasibility phase.
EnCana encountered fresh water in the coal seams that, in terms of quality, “is very similar to the surface water that you’d find in the local area watershed,” said company spokeswoman Florence Murphy.
In fact, the water quality was so good that B.C. environment officials permitted the company to treat the CBM water onsite and dispose of it into a creek that drains into the Elk River, Murphy said.
EnCana must regularly test the water discharge, including exposing sensitive fish species to it.
Doyle noted that out of 326 water-discharge permits issued to oil and gas operations in the province, all but EnCana’s CBM pilot project require deep-well injection rather than surface discharge.
Coal-seam water encountered in the proposed CBM development near Fernie might be of high quality or it might be contaminated with salts like the water typically produced from CBM wells in the Powder River Basin in Montana and Wyoming, Doyle said.
But there’s no way of gathering this data or knowing how the water will need to be handled until a few exploratory wells are drilled, he said.
Mike Gatens, CEO of MGV Energy Inc., a Calgary-based CBM producer, says a federal environmental impact study or international assessment is not needed for the proposed CBM development in southeast B.C.
At least eight companies have received approval for CBM exploration in northeast B.C. as well. They include EnCana, Talisman Energy, Canadian Spirit Resources, Koch Industries, BP Canada Energy, Peace River Corp., Burlington Resources and Canadian Natural Resources Ltd.
“We are of the opinion that the regulations in B.C. are among the best in the world,” said Gatens, who’s also chair of the Canadian Society for Unconventional Gas, which represents the CBM industry in Canada.
Coalbed methane development is a “very slow and deliberate” process that takes a lot of time to get to full-scale commercial production of the gas, Gatens said. “In our experience as an industry, that’s a three- to five-year process, minimum.”
Doyle said that the entire development process in southeast B.C., including the third phase of full-scale commercial production, will be governed by a land and resource management plan for the region that was developed by stakeholders.
The OGC and BC Energy and Mines have also offered to share all non-confidential information, including data on water quality and quantity, with officials in Montana as the CBM project proceeds, Doyle said.
O’Hair said that depending on how extensive and detailed this information is, this step could convince Montana officials to withdraw their request for a full-scale federal assessment or an international study.
State officials have also asked the B.C. government for a tour of EnCana’s pilot project in the Elk Valley.
Montana, which has some 350 producing CBM wells and hundreds more planned, “is not just saying ‘No’ to British Columbia,” O’Hair said.
“We’re just saying there are a lot of things we don’t know and we want to make sure we get some answers.”
